DCIT 25(2), MUMBAI V. H.D. ENTERPRISES, MUMBAI

ITA 2890/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48641 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 07-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 12-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S SRIVASTAVA
• Assessee Lawyers: HARESH V KAGRANA
• Section: 80IB; 263

Judgement Text

1 ITA NO. 2890/MUM/2010 ASSTT. YEAR : 2007-08. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER. I.T.A. NO.2890/MUM/2010 ASSESSMEN T YEAR : 2007-08. DY. COMMISSIONER OF INCOME-TAX, M/S H.D. ENTERPRISES, 25(2), MUMBAI. VS. C-6, HIMANSHU, PREM NAGAR, NEAR MANDPESHWAR INDL. ESTATE BORIVALI (W), MUMBAI 400 090 . PAN AAAACC1589K APPELLANT RESPONDENT. APPELLANT BY : SHRI R.S. SRIVASTAVA. RESPONDENT BY : SHRI HARESH V. KAGRANA. O R D E R PER J. SUDHAKAR REDDY, A.M. : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED A GAINST THE ORDER OF THE CIT(APPEALS)-35, MUMBAI DATED 17-02-2010. 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS IN THE BUSINESS OF BUILDERS AND DEVELOPERS. IT FILED ITS RETURN OF INCOME ON 19-10- 2007 DECLARING NIL INCOME, AFTER CLAIMING DEDUCTION OF RS.11,01,698/- U/S 80IB(10). THE AO AT PARA 3, BROUGHT OUT THE FACTS AS FOLLOWS : 3. THE ASSESSEE FIRM HAS UNDERTAKEN THE PROJECT NA MED ARADHANA COMPRISING OF RESIDENTIAL AND COMMERCIAL ESTABLISHM ENTS. THE ASSESSEE FIRM IS FOLLOWING PROJECT COMPLETION METHOD AND SINCE, M AJOR PORTION OF THE 2 ITA NO. 2890/MUM/2010 ASSTT. YEAR : 2007-08. PROJECT WAS COMPLETED DURING THE PERIOD 2003-04, TH E ASSESSEE HAD CLAIMED SUBSTANTIAL DEDUCTION U/S 80-IB(10) IN THE A.Y. 200 4-05. THE PART OF FLATS/SHOPS THAT REMAINED UNSOLD IN F.Y.2003-04 HAS BEEN SOLD IN THE F.Y. 2004-05 AND THE PROFITS FROM SUCH SALE OF SHOPS/FLA TS WAS DECLARED AND DEDUCTION U/S 80IB(10) WAS CLAIMED THEREON IN A.Y. 2005-06 & A.Y. 2006- 07. DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAS COMPUTED SUCH EXEMPTED PROFITS U/S 80-IB(10) TO THE EXTENT OF RS. 11,01,698/-. 3. THE FINDINGS OF THE AO ARE AT PARA 5 WHICH ARE E XTRACTED BELOW FOR READY REFERENCE : 5. THE SUBMISSION MADE BY THE ASSESSEE HAS BEEN CA REFULLY EXAMINED WITH REFERENCE TO THE FACTS OF THE CASE AND RELEVAN T PROVISIONS OF SECTION 80IB(10) OF THE ACT, BUT THE SAME IS NEITHER FOUND TO BE CONVINCING NOR ACCEPTABLE. THE LANGUAGE OF SECTION 80IB(10) AS IT STOOD BEFORE THE AMENDMENT IS VERY CLEAR AND DOES NOT CALL FOR ANY I NTERPRETATION AS PROPOSED BY THE ASSESSEE. INTERPRETATION OF A SECTION IS REQ UIRED ONLY WHEN THERE IS SOME AMBIGUITY IN THE LANGUAGE OF THE PROVISION WHI CH IS NOT THE CASE IN THE CASE OF THE LANGUAGE OF SECTION 80IB(10). THE SECTI ON VERY CLEARLY PROVIDES THAT THE PROJECT HAS TO BE A HOUSING PROJECT WHIC H IS A CONDITION PRECEDENT FOR AVAILING THE DEDUCTION. THE WORD HOUSING PROJE CT USED IN THE SECTION IN ORDINARY COURSE WOULD STRICTLY MEAN TO INCLUDE H OUSING UNITS AND NOT COMMERCIAL UNITS. HAD IT BEEN THE INTENTION OF LEGI SLATURE TO INCLUDE COMMERCIAL UNITS ALSO THIS SHOULD HAVE CLEARLY BEEN SPECIFIED IN THE SECTION ITSELF AS HAS BEEN DONE BY WAY OF AMENDMENT FROM 1/ 4/2005. THE SECTION PROVIDES FOR WHAT WAS INTENDED BY THE LEGISLATURE. EVEN IF WE CONSIDER THE PROVISIONS POST AMENDMENT, THE AREA OF COMMERCIAL U NITS HAS TO BE MAXIMUM OF 2000 SQ. FEET WHERE AS IN THE CASE OF TH E ASSESSEE THE COMMERCIAL UNIT COMPRISES OF 3631.67 SQ.FEET OF THE TOTAL AREA OF CONSTRUCTION WHICH WORKS OUT TO ALMOST 3.63% WHICH IS AGAIN MUCH MORE THAN THE LIMIT OF 2% OF TOTAL CONSTRUCTION AS PROVI DED IN THE POST AMENDED PROVISIONS AND SCHEME OF SECTION 80IB(10) OF THE AC T. THE SCHEME OF THE SECTION IS VERY CLEAR AND IT PROVIDES THAT ALL THE CONDITIONS SHOULD EXIST TOGETHER FOR AVAILING THE DEDUCTION. IF ONE OF THE CONDITIONS IS NOT FULFILLED, THEN THE ENTIRE DEDUCTION IS TO BE DISALLOWED. THE PROCEEDINGS U/S 263 OF THE I.T. ACT, 1961 FOR THE A.Y. 2004-04 WHERE IN FACT I NITIATED, BUT IT WAS DROPPED BY THE CIT ON THE GROUND THAT APPELLATE ORD ER WAS ALREADY PASSED AND HE COULD NOT TAKE THE RECOURSE TO THE PROVISION S OF SECTION 263 BECAUSE 3 ITA NO. 2890/MUM/2010 ASSTT. YEAR : 2007-08. OF CLAUSE (C) OF EXPLANATION TO EXPLANATION TO SE CTION 263(1). THUS, IT IS CLEAR THAT NO JUDGMENT WAS PASSED BY THE CIT ON THE MERIT OF THE CASE. THEREFORE, ASSESSEES CONTENTION IS NOT ACCEPTABLE IN THIS REGARD. ALL THE MORE, THE TOTAL BUILT UP AREA OF 3,631.67 SQ.FT. OF SHOPS IN THE PROJECT EXCEEDED THE LIMIT OF 2,000 SQ.FT. ALLOWED BY THE A MENDED SECTION 80IB((10) W.E.F. 1.4.2005. CONSIDERING ALL THESE FACTS OF THE CASE WHEREIN THE PROJECT OF THE ASSESSEE WAS APPROVED PRIOR TO THE AMENDMENT AN D SINCE NO COMMERCIAL CONSTRUCTION WAS ALLOWED TO BE PART OF THE PROJECT TO BE ELIGIBLE FOR CLAIM OF DEDUCTION U/S 80IB(10) AND ALSO SINCE THE LIMIT OF COMMERCIAL AREA CONSTRUCTED BY THE ASSESSEE IS MUCH MORE THAN THE L IMIT SPECIFIED IN THE POST AMENDED PROVISION OF THE ACT, THE CLAIM MADE BY THE ASSESSEE CAN NOT BE ENTERTAINED TO BE IN ORDER AND AS PER THE SCHEME AN D PROVISIONS OF SECTION 80IB(10) OF THE ACT. 4. ON APPEAL, THE FIRST APPELLATE AUTHORITY HELD AS FOLLOWS: 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRES ENTATIVE AND THE STAND TAKEN BY THE A.O. THE A.O. DID NOT ALLOW DEDUCTION U/S 80IB(10) ON THE GROUND THAT THE COMMERCIAL AREA EXCEEDED 2% AS WELL AS 2,000 SQ.FT. AND AS PER THE AMENDMENT W.E.F. 01.04.2005, THE CEILING ON COMMERCIAL AREA IS ONLY 2,000 SQ.FT. OR 2% OF THE TOTAL BUILT UP AREA WHICH EVER IS LESS. HOWEVER, THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HO NBLE MUMBAI TRIBUNAL IN ITA NO. 5712/MUM/08 DATED 06.08.2009 IN WHICH THE H ONBLE TRIBUNAL HAS EXAMINED THE FACTS OF THE CASE INCLUDING THE BUILT UP AREA OF RESIDENTIAL AND COMMERCIAL AREA AND VARIOUS DECISIONS AND AGREED WI TH THE CLAIM OF THE APPELLANT THAT IT IS ENTITLED TO DEDUCTION U/S 80IB (10) AS THE COMMERCIAL AREA WAS LES THAN 10%. IT WAS HELD BY THE HONBLE TRIBUN AL THAT CLAUSE (D) OF SECTION 80IB(10) HAS NO RETROSPECTIVE APPLICATION A ND IT APPLIES WITH EFFECT FROM A.Y. 2005-2006 AND IN THIS CASE THE PROJECT WA S ALREADY APPROVED AND EVEN COMPLETED BEFORE A.Y. 2005-06 AND, THEREFORE, THE AMENDED PROVISIONS ARE NOT APPLICABLE. FOLLOWING THE DECISION OF THE H ONBLE TRIBUNAL IN THE APPELLANTS OWN CASE, I HOLD THAT THE A.O. WAS NOT JUSTIFIED IN DENYING THE CLAIM OF DEDUCTION OF SECTION 80IB(10) AND HE IS DI RECTED TO ALLOW THE CLAIM. 4 ITA NO. 2890/MUM/2010 ASSTT. YEAR : 2007-08. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON TH E FOLLOWING GROUNDS : I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE S PROJECT ALSO CONSISTS OF COMMERCIAL AREA. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) FURTHER ERRED IN HOLDING THAT THE ASSESSEE S PROJECT HAS BEEN APPROVED AS RESIDENTIAL PROJECT WITHOUT APPRECIATIN G THE FACT THAT SECTION 80IB(10) PRIOR TO AMENDMENT DOES NOT SPEAK ABOUT INCLUSION OF ANY COMMERCIAL IN THE PROJECT. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN APPRECIATING THE FACT THAT THE LANG UAGE OF SECTION 80IB(10) AS IT STOOD BEFORE THE AMENDMENT IS VERY C LEAR AND DOES NOT CALL FOR ANY INTERPRETATION AS PROPOSED BY THE ASSE SSEE. INTERPRETATION OF A SECTION IS REQUIRED ONLY WHEN THERE IS SOME AM BIGUITY IN THE LANGUAGE OF THE PROVISION WHICH IS NOT THE CASE IN THE CASE OF THE LANGUAGE OF SECTION 80IB(10). THE SECTION VERY CLEA RLY PROVIDES THAT THE PROJECT HAS TO BE A HOUSING PROJECT WHICH IS A CONDITION PRECEDENT FOR AVAILING THE DEDUCTION. THE SECTION P ROVIDES FOR WHAT WAS INTENDED BY THE LEGISLATURE. 5. WE HAVE HEARD SHRI R.S. SRIVASTAVA, LEARNED DR A ND SHRI HARESH V. KAGRANA, LEARNED COUNSEL FOR THE ASSESSEE. 6. THE LEARNED CIT(APPEALS) HELD THAT THE ISSUE I N QUESTION IS SQUARELY COVERED BY THE DECISION OF THE HONBLE MUMBAI TRIBU NAL IN ITA NO. 5712/MUM/08 DATED 06-08-2009 IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06. THE HONBLE BOMBAY HIGH COURT IN INCOME TA X APPEAL NO. 4350 OF 2010, ORDER DATED 22 ND FEB.,2011 APPLIED THE JUDGMENT IN THE CASE OF BRAH MA ASSOCIATES AND UPHELD THE CLAIM OF THE ASSESSEE. AS BOTH THE PARTIES AGREED THAT THE ISSUE IS IDENTICAL AND THAT IT PERTAINS TO THE SAME PROJECT, WE RESPECTFULLY FOLLOW THE JURISDICTIONAL HIGH COURT ORDER AND DISMISS THE APPEAL OF THE REVENUE. 5 ITA NO. 2890/MUM/2010 ASSTT. YEAR : 2007-08. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL, 2011. SD/- SD/- (VIJAY PAL RAO) (J. SU DHAKAR REDDY) JUDICIAL MEMBER. ACCOUNT ANT MEMBER MUMBAI, DATED: 27 TH APRIL 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, H -BENCH (TRUE COPY) BY ORDER ASSTT. REGISTR AR, ITAT, MUMBAI. WAKODE